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March 01, 2011

How large is Medicare's ESRD entitlement?

We have all seen the numbers used to describe the size of Medicare's "special" ESRD Entitlement:

In 2009 ~380,000 people used dialysis - A lot of people need dialysis.

~75% of the people who use dialysis or ~290,000 people, have Medicare as their primary insurer - Medicare pays for dialysis.

People who use dialysis cost Medicare over 20 billion dollars a year (and/or about $75,00/year/person) - less than 1% of Medicare beneficiaries responsible for over 7% of Medicare's cost.

There is a special dialysis entitlement - Medicare pays for dialysis regardless of age!

From there one concludes, because of the dialysis entitlement Medicare spends a lot of money on dialysis. That's wrong: the dialysis entitlement (AKA the ESRD entitlement) is a small part of Medicare spending.

This chart from Kaiser breaks down Medicare enrollment by qualification; fewer than 25,000 Medicare beneficiaries have access to Medicare solely due to severe kidney disease, that's out of 417,000 total (it includes people living with a transplant). A slight majority, of all Medicare beneficiaries with severe kidney disease, have their access to Medicare due to disability; they're closely followed by beneficiaries who have their access to Medicare due to age (and in all cases, working enough qualifying quarters).

If there were no ESRD Entitlement, nothing would change for 393,328 out 417,570 beneficiaries ... the only people impacted would be the 24,242 who have access to Medicare due solely to their kidney disease. In addition, the average cost/year to cover the dialyzors among the 24,000 would be far less than the $75,000/year Medicare-wide average.

The $75,000 average includes the cost of skilled nursing facility care, services the dialyzors among the 24,000 wouldn't typically need; in general this sub set of dialyzors would be among the least expensive for Medicare. If the average cost, per year for one of the 24,000 is less than $50,000 a year, per beneficiary, the cost of the "ESRD entitlement" is much closer to one billion dollars than it is to two, let alone twenty billion dollars.

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Also, entitlement means you are entitled to have Medicare coverage, if you can pay the $100 per month premiums. Then you can get the $35 per month drug coverage. After you pay your premiums, they do not cover all your expenses. If you have worked hard many years, and have any assets, no one wants to help you until you have lost everything.